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Tesco price cuts fail to boost UK sales figures

SHOPPERS in Scotland are more anxious about Christmas spending than those in the south of England, the UK's biggest retailer Tesco revealed as it posted its fourth consecutive quarter of falling sales.

Tesco launched a £500 million price-cutting campaign in September and has seen a 1% rise in sales volumes in the UK, where it has 2700 stores, in the 13 weeks to November 26.

With price cuts this translated into a 0.9% decline in like-for-like sales excluding VAT and petrol. This matched the fall in the previous quarter.

The drop compares with increases reported by rivals Asda, J Sainsbury and Wm Morrison, albeit for different trading periods.

Retailers generally are struggling as shoppers' disposable incomes are squeezed by rising prices and muted wages growth.

Tesco has suffered more than its main rivals, in part because it sells more discretionary non-food goods where shoppers have been cutting back most.

Finance director Laurie McIlwee said its research showed customers in some parts of the country were concerned about the affordability of Christmas.

"We are seeing quite different feedback from customers in Wales, Northern Ireland, Scotland and the north of England. There is less anxiety in the south and south-east."

The group said sales of non-food items fell at a slower rate in the quarter than before as its electricals arm was helped by demand for iPads and Kindles.

Philip Dorgan, analyst at Panmure Gordon, said: "The UK numbers are not yet good enough. Sales cannot even be said to be moving in the right direction yet. However, we believe Tesco will eventually get it right."

Tesco saw a significant slowdown in Asia, which has driven the overall group performance in previous months, where like-for-like sales grew 0.8%, compared with 3.9% in the second quarter.

The group also delayed the launch of a mortgage product by Edinburgh-based Tesco Bank until later next year.

Tesco's shares rose 0.3p, or 0.08%, to 397.2p.

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